Ownership and ownership concentration: which is important in determining the performance of China’s listed firms?

Abstract

This article investigates the impact of ownership and ownership concentration on the performance of China's listed firms. By recognizing the differences between ownership and ownership concentration and between total ownership concentration and tradable ownership concentration, we find that ownership concentration is more powerful than any category of ownership in determining firm performance; tradable ownership concentration has a more significant and positive influence on firm performance than total ownership concentration; the highest level of firm performance is approached when a firm is characterized by both total ownership concentration and tradable ownership concentration. Thus, we propose a conclusion that ownership concentration enhances firm performance regardless of who the concentrated owners are.

Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter?

“…Thus, empirical evidence from the OLS and FE approaches supports Hypothesis 1 that ownership concentration is positively correlated with performance. Although this finding is consistent with prior studies (e.g., Gedajlovic & Shapiro, 2002;Ma, Naughton, & Tian, 2010), it is likely to be severely distorted by other potential sources of endogeneity which are not controlled by the FE approach such as simultaneity and dynamic endogeneity (Wintoki et al, 2012). The next subsections discuss the results obtained from the two-step system GMM method which allows us to control for such potential sources of endogeneity.…”

Ownership Characteristics and Earnings Management in China

“…Most studies examine the relationships between state ownership and firm value. According to resource-based theory, state-owned firms have advantages in their access to resources, tax benefits and a secured operation environment, which all add to the value of state-owned firms (Ma et al, 2010;Sun et al, 2002). In contrast, according to agency theory, state-owned firms have the burden of social responsibility and political objectives, such as maintaining employment and satisfying government annual revenue goals.…”

“…Market investors are 'pure investors,' in that they are typically tied to the firm by their equity stakes, and have maximizing equity returns as their primary investment objective. Ma et al (2010) use the two concepts of 'stable investors' and 'market investors' to explain the ownership of China's listed firms. The holders of non-tradable shares are definitely stable investors, because their shares are not tradable on stock exchanges.…”

Are There Non-linear Effects of Banking Relationships and Ownership Concentration on Operational Performance? Empirical Evidence from Portuguese SMEs Using Cross-section Analysis and Panel Data

“…Moreover, there is no shortage of empirical studies showing evidence that ownership concentration has a positive effect on company performance. This relationship is validated, for example, by Hill and Snell (1988) and Agrawall and Mandelker (1990) in the context of the North American companies, Kaplan and Minton (1994) and Gedajlovic and Shapiro (1998), in the case of Japanese firms, Gorton and Schmid (2000) for German companies, Ehikioya (2009), in Nigerian companies and Ma et al (2010) and Kurt et al (2010), in the context of Chinese enterprises. Gedajlovic and Shapiro (1998) warn that investors in the Japanese institutional context are somewhat protected by the legal system and ownership is highly concentrated.…”

“…Ownership concentration, as a corporate governance mechanism, appears as a determinant of agency costs (Jensen and Meckling, 1976). Based on this premise, the effect of ownership concentration on performance has been widely documented in the literature, particularly for companies in the United States, the UK and China (Bhattacharya and Ravikumar, 2001, Gadhoum et al, 2005Villalonga and Amit, 2006, Ma et al, 2010.…”